I'm director of content strategy at startup Exitround. I was previously a staff reporter at Forbes covering start-ups and venture capital. I'm interested in entrepreneurs who want to change the world, or have a point of view or compelling story. Email me at tgeron.news@gmail.com. I was previously a reporter for Dow Jones VentureWire where my work also appeared in the Wall Street Journal. I've also written for Red Herring, the Long Beach Press-Telegram and other outlets. In a former life I was a web developer. Follow me on Twitter tomiogeron, or Facebook , or Google+.

Airbnb And The Unstoppable Rise Of The Share Economy

On paper, Frederic Larson is just one data point in five years of U.S. government statistics showing underemployment in dozens of industries and stagnant income growth across the board. The 63-year-old photographer with two children in college was downsized by the San Francisco Chronicle in 2009. He now spends his time teaching at Academy of Art University with occasional lecturing gigs in Hawaii. A far cry from the salary, benefits and company car he used to have.

But Larson is also a data point in an economic revolution that is quietly turning millions of people into part-time entrepreneurs, and disrupting old notions about consumption and ownership. Twelve days per month Larson rents his Marin County home on website Airbnb for $100 a night, of which he nets $97. Four nights a week he transforms his Prius into a de facto taxi via the ride-sharing service Lyft, pocketing another $100 a night in the process.

It isn’t glamorous–on nights that he rents out his house, he removes himself to one room that he’s cordoned off, and he showers at the gym–but in leveraging his hard assets into seamless income streams, he’s generating $3,000 a month. “I’ve got a product, which is what I share: my Prius and my house,” says Larson. “Those are my two sources of income.” He’s now looking at websites that can let him rent out some of his camera equipment.

The “gig economy,” the plethora of microjobs fueled by online marketplaces offering and filling an array of paid errands and office chores, has been well-documented, and sites like TaskRabbit, Exec and Amazon’s Mechanical Turk continue to grow apace. What Larson finds himself in, however, is something lesser-noticed and potentially far more disruptive–a share economy , where asset owners use digital clearinghouses to capitalize the unused capacity of things they already have, and consumers rent from their peers rather than rent or buy from a company.

While Airbnb is the best-known example of this phenomenon (to most casual observers, it’s the only example), over the past four years at least 100 companies have sprouted up to offer owners a tiny income stream out of dozens of types of physical assets, without needing to buy anything themselves. “The sharing economy is a real trend. I don’t think this is some small blip,” says Joe Kraus, a general partner at GoogleGoogle Ventures who has backed two car-sharing sites, RelayRides and Sidecar. “People really are looking at this for economic, environmental and lifestyle reasons. By making this access as convenient as ownership, companies are seeing a major shift.”

The sharing concept has created markets out of things that wouldn’t have been considered monetizable assets before. A few dozen square feet in a driveway can now produce income via Parking Panda. A pooch-friendly room in your house is suddenly a pet penthouse via DogVacay. On Rentoid, an outdoorsy type with a newborn who suddenly notices her camping tent never gets used can rent it out at $10 a day to a city slicker who’d otherwise have to buy one. On SnapGoods, a drill lying fallow in a garage can become a $10-a-day income source from a homeowner who just needs to put up some quick drywall. On Liquid, an unused bicycle becomes a way for a traveler to cheaply get around while visiting town for $20 a day.

Getting into the share economy was the reason Avis Budget GroupAvis Budget Group last month chose to pay a whopping $500 million for Zipcar, despite the fact that the pioneering rent-by-the-hour startup generated a paltry profit of $4.7 million over the past year. But Zipcar in some ways misses the larger point of what’s going on: Its fleet, as with Avis’, has been centrally owned. A more profitable model may lie in peer-to-peer car-sharing services such as RelayRides and Getaround, which mimic Hertz or Avis except that the service itself owns nothing. Their fleets, about 50,000 combined at last count, draw from the tens of millions of autos idling in America’s driveways. SideCar and Lyft slice that market finer, monetizing an empty seat by letting owners tote along fee-paying passengers on routes they may already be taking.

Just as YouTube did with TV and the blogosphere did to mainstream media, the share economy blows up the industrial model of companies owning and people consuming, and allows everyone to be both consumer and producer, along with the potential for cash that the latter provides. Shervin Pishevar, a venture capitalist at Menlo Ventures and an investor in Getaround, TaskRabbit, Uber and other startups in this space, believes these services will have a major impact on the economics of cities. “This is much bigger than any specific app,” he says. “This is a movement as important as when the web browser came out.”

FORBES estimates the revenue flowing through the share economy directly into people’s wallets will surpass $3.5 billion this year, with growth exceeding 25%. At that rate peer-to-peer sharing is moving from an income boost in a stagnant wage market into a disruptive economic force. Technology has vastly improved on the newspaper classifieds that brokered the sweating of assets for a century. Ebay’s much-duplicated rating system bestows commercial credibility on individuals. With Facebook you can go further, checking people’s profiles before renting to them. Smartphone apps let sharers transact anywhere, see what’s being shared nearby and pay on the spot. “We’re moving from a world where we’re organized around ownership to one organized around access to assets,” says Lisa Gansky, who started the Ofoto photo-sharing site, before selling it in 2001 to Eastman Kodak.

Dozens of startups chasing the trend will fail, as marketplaces like these always prove winner-take-all. The leaders are, as expected, absorbing blows from anxious regulators and incumbents. Airbnb is fighting to prove its legality in New York and San Francisco. New York City officials are going after short-term rentals – but only when they get complaints. In 2012 the city did 828 inspections and issued 2,239 violations for short term rentals. This year, fines for repeat offenders go up to a maximum of $25,000. Lyft and SideCar, meanwhile, were cited by California utility commissioners recently for operating without a license. Big issues also have yet to be worked out over how these services are taxed and whether they protect customers sufficiently from liability and fraud. And who’s to say whether what works among the hipsters in Brooklyn and San Francisco translates in between.

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The share economy and collaborative consumption have definitely arrived. The things that none of these services have solved is the curation of the community who is sharing.

Social profiles will not solve it. If someone is staying in my hoe or taking my car you can be sure I want to know who they are so this type of thing doesn’t happen: http://techcrunch.com/2012/08/14/police-bust-prostitues-using-airbnb-apartment-in-stockhom/

Full disclosure: I’ve been working on Demeure for many years and these are some of the issues we’ve been working hard to solve. They’re neither simple issues nor solved by connecting to the OpenGraph.

I personally think we are seeing a rise in what is called the sharing economy because of the phobia against collectivism and socialism in our country. The incessant focus of individualism in America that stems from complex political and historical reasons means that we have repressed aspects of collectivism in our culture and it is now receiving a backlash. It is the nature of society that things go through cycles but always, technology pushes an ever growing complexity. Yes the sharing economy will cause some people to lose their jobs but it will also create many jobs at the same time. Yes some people will be resistant to collective ideals but others will be open to it and will influence and change the paradigm that is currently accepted. It is good to question cultural shifts but you have to realize that they have always existed. The more important question is, are you able to adapt to these shifts or not?

There’s a good reason for the ‘phobia’ about socialism and communism in America — a lot of the people among the immigrant populations know first hand about the horrors of mass murder under communism and suppression of entrepreneurialism and human rights under socialism. So they came here. They are telling the truth about communism — you aren’t.

In fact, the worst aspects of the collectivization we knew in real life are in these digital services — the lack of accountability, the lack of transparency, the ability of a few to exploit the labour of many fervent collectivized believers who don’t have union benefits or retirement plans but just get to chop up their personal property into more and more time or space slivers.

Work on the Internet collective farm is not everything that it has cracked up to be. Write when you get work.

Just wondering about insurance, my auto insurance is high and my house insurance is the same. I’m pretty sure if I called them and told them I was renting my car or using it as a Taxi they would be concerned not to mention my Homeowners Insurance provider who is reactionary. Also aren’t there a lot of laws and licensees involved.

Anyway success will depend upon trust. I find that people of the same educational level and economic level trust each other more so than those who could be considered on a different playing field. Also it is common to be generous with the young but I personally don’t find them trustworthy in most cases.

I suspect that Homeowners Insurance will not cover a leather couch after it has been ruined with Body Oil.

The insurance question will be key to the survival of some of these services. Some car insurers like USAA have already stated that they will not renew car owners who are renting out their vehicles or using them as taxis, and a one-million dollar insurance policy from the broker isn’t as big as you might think when you’re dealing loss of life and permanent disability–see http://www.nytimes.com/2012/04/14/your-money/relayrides-accident-raises-questions-on-liabilities-of-car-sharing.html?pagewanted=all&_r=0. I do think some amount of regulation will be needed for these new services to insure both the safety of the arrangements and to monitor their impacts on neighbors, local laws, etc.

Unfortunately, airbnb’s insurance does NOT include liability insurance. Their $1Million “guarantee” was established after a well-publicized theft and house trashing incident, and it was an effective bit of spin, apparently even taking in the likes of you, Tomio!) But liability is the real risk for airbnb hosts, and on that front, the “Host Guarantee” leaves hosts completely uncovered.

The sharing, or collaborative consumption, approach is spreading beyond guest rooms or cars.

Commute buses are also ripe for this model, as private buses (famously provided by some of the largest tech companies for their own employees only) are expensive and burdensome for one company to provide and manage.

However, companies in one area are very likely to all have employees commuting from the same cities, so can easily share commute buses. Their employees have a direct, wifi-enabled ride to work, at a cost that is affordable for companies of nearly any size.

Our company, RidePal, is building just such a shared commute-bus network in the San Francisco Bay Area and already offers over a dozen daily services.

Dominic I saw you guys on AngelList and thought you had a good thing going on! I have been following the sharing economy for a while now. My interest was renewed after seeing The Atlantic’s article “The Cheapest Generation” http://www.theatlantic.com/magazine/archive/2012/09/the-cheapest-generation/309060/

I would love to chat with you concerning open positions at RidePal. @billmcneely